Colorado Interstate Gas Company, L.L.C.
High Plains System 2018 Expansion
to Cheyenne Hub Delivery Points using CIG 5C Capacity
Colorado Interstate Gas Company, L.L.C. (CIG) is conducting a binding Open Season for additional High Plains System capacity to be made available by approximately November 1, 2018. The additional High Plains transportation capacity offered in this Open Season will have primary receipt rights at existing and potentially new interconnections with processing plants in the DJ Basin and will have primary delivery rights at various points off the CIG system at the Cheyenne Hub as described below. CIG is conducting this Open Season on the terms described below.
This binding Open Season will commence on September 20, 2017 and is scheduled to close at 10:00 a.m. Mountain Time on September 25, 2017. Bids must be received prior to the close of the Open Season and must be submitted to KMWestBids@kindermorgan.com using the Bid Sheet attached hereto.
CIG intends to provide notification of capacity awards by 5:00 p.m. Mountain Time on September 25, 2017.
By submitting a Bid Sheet, the bidding party will be representing that it has full authority to bind the requesting company.
Questions concerning this Open Season should be directed to:
Greg Ruben 719-520-4870
Laine Lobban 719-520-4344
Description of The High plains 2018 expansion USING CIG 5C CAPACITY
The High Plains System 2018 Expansion consists of 270 MDth/day from primary High Plains receipt rights at existing and potentially new interconnections with processing plants in the DJ Basin to the following primary delivery points:
LOCATION PIN NUMBER
LOCATION NAME
INTERCONNECTING PIPE
AVAILABLE CAPACITY (AS OF SEPTEMBER 2017) DTH/D
896002
Dullknife (DUL)
Trailblazer
1,376,968
800716
Thunder Chief (TDC)
Cheyenne Plains
282,800
800184
Curley (CUR)
742,350
800104
Bowie ((BOW)
CIG
631,100
896021
Rockport (RKP)
KMIT
238,000
896018
Little Wolf (LTW)
PSCo
67,900
896026
Owl Creek (OWL)
394,700
896084
Sitting Bull (STB)
REX
62,900
800212
Dover (DOV)
139,229
This additional capacity will be made available through use of CIG Line 5C capacity, construction of new facilities, modifications of existing facilities and/or changes in operations of existing facilities.
CIG will provide the requested transportation service under existing Rate Schedule TF-HP of CIG's FERC Gas Tariff (CIG Tariff).
CIG anticipates that it will require bids for service for at least 5 years at maximum recourse rates (plus the cost of mainline capacity and any off-system capacity charge pursuant to Section 4.3 of the General Terms and Conditions of CIG's Tariff). CIG will also consider negotiated reservation rate bids. CIG anticipates that negotiated rate bids of at least $3.65/Dth/month will be necessary for the expansion project to go forward if at least 200 MDth but less than 260 MDth of capacity is awarded under this Open Season. If at least 260 MDth of capacity is awarded in this Open Season CIG anticipates that a negotiated rate bid of at least $3.0417/Dth will be sufficient for the project to move forward.
Negotiated rate bids must also provide that, subject at all times to FERC's approval of the particular costs, CIG shall be entitled to recovery of Greenhouse Gas Emissions Costs incurred by CIG attributable to TF-HP service. As used herein "Greenhouse Gas Emissions Costs" means (i) the cost of any carbon emissions tax or other greenhouse gas assessment that is imposed on CIG, (ii) the cost of any greenhouse gas mitigation efforts, including the costs of credits and offsets, that CIG incurs to comply with any greenhouse gas laws, rules or regulations, and/or (iii) costs incurred under a voluntary program of greenhouse gas mitigation. If (i) CIG is unsuccessful in having the FERC-approved Greenhouse Gas Emissions Costs incurred by it recovered through a FERC-approved surcharge applicable to all shippers, and (ii) such amounts are recoverable only through CIG's FERC-approved recourse rates, then Bidder must agree to modify its negotiated fixed monthly reservation rate by the amount of CIG's maximum reservation rate under Rate Schedule TF-HP that is attributable to such costs.
In addition to the bid rate, each bid shall be subject to the applicable maximum commodity rate and all other maximum rates, charges and surcharges, including ACA, Fuel and L&U, and any other authorized surcharges assessed under the TF-HP Rate Schedule as those amounts may be amended or superseded from time-to-time. To the extent the service involves the use of CIG mainline capacity and/or the facilities of other pipelines, additional charges above the recourse rate for Rate Schedule TF-HP will apply. Each bid will also be subject to the applicable maximum commodity rate and all other maximum rates, charges and surcharges, including ACA, Fuel and L&U, and any other authorized surcharges assessed to CIG for the CIG mainline and/or off-system capacity.
CIG anticipates the expansion capacity will be available by approximately November 1, 2018.
BID CONDITIONS AND PROCEDURES
Bidders may make their bids subject to the receipt of approval from the appropriate management, management committee, and/or board of directors of bidder and its parent companies of the bid by September 26, 2017.
For purposes of awarding capacity in this Open Season, CIG reserves the right to reject any bid which contains conditions not previously listed. In addition, CIG reserves the right to not proceed with the development of the expansion capacity if CIG determines, in its sole discretion, that:
- CIG is unable to obtain any necessary regulatory or administrative authority to provide the expansion capacity;
- Insufficient demand for the expansion capacity is demonstrated In this Open Season;
- CIG is unable to obtain any necessary CIG mainline capacity and/or any necessary off-system capacity on terms and conditions acceptable to CIG's management, in its sole discretion; or
- The cost of developing the additional capacity exceeds an amount that CIG believes will provide an acceptable return on the expansion project.
Successful bidders will be required to execute Firm Transportation Service Agreements (FTSAs) with CIG in the form contained in the CIG Tariff within 30 days from tender by CIG.
EVALUATION CRITERIA
If CIG receives acceptable bids for capacity in excess of the actual amount of available capacity, then the capacity will be allocated based on the Present Value (PV) of each bid as calculated below; provided, however, CIG reserves the right to aggregate bids that generate the highest PV to CIG.
PV will be the sum of the present values for all of the months beginning with the first month capacity is available through the end date of the bid term.
The PV for each month will be calculated as follows:
PV = (R X Q)/((1+i) to the power of n)
Where:
R = the monthly reservation bid rate
Q = the monthly bid quantity
i = the monthly discount rate of 0.33% (which is the annual discount rate of 3.96% divided by 12).
n = the number of months from the earliest date the capacity is available in the Open Season to the month the revenue will be received (the first month capacity is available n = 1, the second month n = 2, and so on).
If there is insufficient capacity available to meet all successful bids, and if two or more of the lowest accepted bids are of equal Present Value, unless such bidder(s) have elected not to have the bid(s) prorated, capacity will be allocated pro rata based on the Maximum Delivery Quantity of the bids that are tied.
CIG notes that FERC Order No. 894, in some cases, prohibits multiple affiliates of the same entity from bidding in an open season for capacity in which the pipeline may allocate capacity on a pro rata basis. It appears to CIG that the restrictions imposed by FERC Order No. 894 will be applicable in this Open Season and FERC recommends that potential bidders review and adhere to the requirements of that FERC Order.
Creditworthiness Requirements:
The successful bidder(s) must satisfy the creditworthiness requirements of CIG's FERC Gas Tariff. In addition, in connection with service requiring the construction of new facilities, successful bidders must, at a minimum, demonstrate creditworthiness equal to two (2) years of anticipated charges for the awarded transportation capacity. CIG will assess the creditworthiness of each successful bidder in accordance with Section 4.14 of CIG's FERC Gas Tariff. Bidders that fail to satisfy such creditworthiness requirements within a reasonable time will have their capacity award withdrawn. CIG will treat the financial statements provided by bidders as confidential.
Each successful bidder and CIG shall enter into and execute an FTSA reflecting the terms of its bid as awarded by CIG. The FTSA will be in the form contained in CIG's FERC Gas Tariff.
BID SHEET
Open Season EBB Identifier: High Plains System 2018 Expansion Using CIG 5C Capacity
Email Bid To: KMWestBids@KinderMorgan.com
A. Shipper Information
Legal Name of Bidder:__________________________
Name of Requesting Party:_______________________
Title of Requesting Party:________________________
DUNS Number:________________________________
Phone:_______________________________________
B. Term of Service (e.g., 1 Year):____________________________
Effective Start Date:___________________________________
Term End Date:____________________________
C. Maximum Daily Quantity (MDQ):____ __________________
Will you accept a pro rata allocation of capacity if necessary Yes__ No___
Receipt Point(s)
Delivery Point(s)
Requested Dth/day MDQ
D. Bid Rate (expressed as the maximum recourse reservation rate or a rate per Dth per month and check the appropriate box to reflect a discounted reservation rate or a negotiated rate):
□ Maximum Rate Schedule TF-HP Reservation Rate (subject to additional CIG mainline and/or off-system capacity charges).
□ Discounted Reservation Rate of $_________________/Dth/month (subject to additional CIG mainline and/or off-system capacity charges).
□ Negotiated Rate of $ /Dth/month (inclusive of the CIG mainline and/or off-system capacity charges) By submitting a Negotiated Rate Bid the bidding party agrees to the addition of the Greenhouse Gas Emissions Cost recovery mechanism described in the Open Season. .
*By submitting a bid to Transporter, the bidding party certifies that (a) all information contained in the request is complete and accurate, (b) it satisfies, or will be able to satisfy, all the requirements of Transporter's FERC Gas Tariff, and (c) the person submitting the bid has full authority to bind the bidding party.